BBC urged to sell a stake in its commercial arm

The BBC should sell a stake in its commercial arm, BBC Worldwide, a House of Lords committee has said.

In a report on the UK film and TV industries, it said this would enable BBC Worldwide to become a major global distributor of British programming.

The BBC Trust said any aggressive expansion would carry reputational risks and market sensitivities.

BBC Worldwide has been criticised by MPs and others for growing too fast and damaging its commercial rivals.

The corporation's commercial arm was criticised for extending its commercial involvement in 2007 when it acquired a 75% stake in travel guide Lonely Planet.

'Best value'

Last April the BBC was told to rein in its commercial operations by the Commons Culture, Media and Sport Committee on the grounds that new activities undertaken by BBC Worldwide risk jeopardising the corporation's reputation.

Amidst this backdrop of criticism, the Trust ordered BBC Worldwide to curb its merger and takeover activities.

A company with private investment but retaining a BBC shareholding could achieve both bigger profits and also major proceeds from the sale

Lord Fowler

Last year it conducted a review of the corporation's commercial activities and concluded that deals like the Lonely Planet acquisition will no longer be allowed unless there are "exceptional circumstances".

The Trust said it wanted to ensure that Worldwide's plans secure the "best value for licence-fee payers".

But the all-party Lords Communications Committee has taken a very different view.

It said BBC Worldwide should expand further to become a major global brand, selling UK programmes for independent producers and other broadcasters as well as the BBC.

This would produce extra profits, jobs and opportunities for UK production companies, it said.

The committee said it supports government plans to sell a stake to private investors to raise funds - but says the BBC link must be maintained.

'Open mind'

Former Tory cabinet minister Lord Fowler said the part-privatisation of Worldwide would establish a British-owned global brand.

He said: "BBC Worldwide has been immensely successful in developing the commercial income of the BBC and now has a revenue of around £1bn a year.

If we saw fit to implement any changes in the future, our priorities would be to ensure the BBC's brand and reputation was protected and to secure the best value for licence fee payers from the BBC's intellectual property

BBC Trust

"All the evidence suggests that there is further scope to expand but to do this will require private capital.

"It cannot be achieved by using the licence fee. A company with private investment but retaining a BBC shareholding could achieve both bigger profits and also major proceeds from the sale."

The committee also criticised No 10 for "failing to understand" the value of Project Kangaroo - a joint venture by the BBC, ITV and Channel 4 to make products available as video-on-demand.

It said there was a "serious risk" the decision to block the project - made by the Competition Commission last year - would result in UK producers losing an additional revenue opportunity and leave the market open to US services.

Lord Fowler urged ministers to review their policy to ensure "similar mistakes [were] not made in the future".

The BBC Trust said it kept an open mind on BBC Worldwide's ownership structure.

"If we saw fit to implement any changes in the future, our priorities would be to ensure the BBC's brand and reputation was protected and to secure the best value for licence fee payers from the BBC's intellectual property," a spokesman said.

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